RCL interim results December 2018

Revenue for the interim period increased to R13.265 billion (2017: R12.817 billion), operating profit lowered to R692.1 million (2017: R810.3 million), profit for the period attributable to equity holders of the company decreased to R579 million (2017: R663.4 million), while headline earnings per share came in at 54.8 cents per share (2017: 74.5 cents per share).

The directors declared an interim gross cash dividend (number 88) of 15.0 cents (12.0 cents net of dividend withholding tax) per share for the six-month period ended December 2018.

Company prospects
We expect trading conditions to remain challenging due to South Africa"s poor economic outlook. The upcoming elections are likely to result in an extended period of uncertainty and the prospect of labour instability remains high. We expect that the poultry market will remain depressed whilst the market remains oversupplied and as commodity input costs continue to rise. Further volume and market share growth in Groceries will be challenging in a highly competitive market. The Consumer division will continue to focus on strong innovation, brand investment and efficiencies to optimise profitability.

The short-term outlook for Sugar remains challenged with the overhang of high levels of imported sugar still impacting the local market, despite the implementation of tariffs that are offering some level of protection for the industry. The negative impact of the Health Protection Levy on local market demand is expected to continue. The sugar industry has significant structural issues which require resolution to ensure long-term sustainability. Various SASA initiatives and engagements with relevant industry participants are under way to find an optimal solution. We expect the good progress made in the first six months at Millbake to continue. Animal Feed will focus on regaining lost volume and margin.

The Logistics division is well positioned to offer customers a multi-temperature (including chilled, frozen and super-frozen) route-to-market supply chain solution. The new business won during the period under review bodes well for the remainder of the year and the focus will be on bedding down these opportunities.

Despite the expected economic headwinds, our strong balance sheet and cash flow generation positions us well.


RCL - trading statement

Shareholders are advised that RCL FOODS" headline earnings per share ("HEPS") for the six months ended December 2018 ("current period") is expected to be between 53.0 cents (-28.9%) and 57.0 cents (-23.5%) when compared to the reported HEPS of 74.5 cents for the six months ended December 2017 ("corresponding period").

Earnings per share ("EPS") for the current period is expected to be between 65.0 cents (-15.3%) and 69.0 cents (-10.0%) when compared to the reported EPS of 76.7 cents for the corresponding period. EPS for the current period includes a profit from farm sales and is therefore expected to be higher than HEPS.

The earnings decline was largely attributable to the difficult trading conditions experienced in the Sugar and Chicken business units over the past six months.

The Sugar business unit"s result is expected to be significantly down on the corresponding period, as dumped imports and lower domestic demand resulted in a higher proportion of export volumes at depressed international prices.

The Chicken business unit"s result is also expected to be down on the corresponding period. The decline is largely a result of continued high levels of imports driving retail prices lower, the lingering impact of the Listeriosis crisis on the Rainbow brand and rising feed input costs. Chicken"s result includes a profit from dormant farm sales of R105.0 million following the decision to downsize the KZN operations.

Pleasingly the Group"s Grocery brands continue to perform strongly.

The Group"s financial results for the current period are expected to be released on SENS on 4 March 2019.

The financial information on which this trading statement is based has not been reviewed and reported on by the Group"s external auditors.